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German Recession to Impact Indian Exports


India's exports, especially in sectors like apparels, footwear, and leather goods, are expected to suffer due to the consecutive contraction of the German economy, according to exporters. The Federal Statistical Office reported a 0.3% decline in Germany's gross domestic product (GDP) from January to March, following a 0.5% drop in the previous quarter of 2022.

Germany's long-term recession will extend beyond the country itself, affecting India's exports to Europe as a whole. Sectors such as leather products, chemicals, and light engineering items are anticipated to face declines, potentially resulting in a decrease in India's exports to Germany, which amounted to USD 10.2 billion in 2022-23.

As per experts, the recession will adversely affect India's exports valued at USD 2 billion, including smartphones, apparel, footwear, and leather goods. During a recession, products used in daily life often experience a significant decline in demand.

Furthermore, the upcoming carbon border tax imposed by Germany will impact the export of iron and steel products.

However, it is currently too early to determine the full extent of the consequences on Indian exports, as German companies tend to explore cheaper alternatives during recessionary periods.

While a recession is defined as two consecutive quarters of contraction, economists on the euro area business cycle dating committee consider a broader range of data, including employment figures. Germany's role as one of the euro currency users is crucial for the overall growth of the European Union.


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